Big Changes Are Coming To GM In 2025

General Motors reported its latest income and profit numbers this past week, with a 2024 full-year net income attributable to shareholders of $6 billion (down 40.7% from 2023) and a net loss of $3 billion in the fourth quarter of the year. The revenue in 2024, however, was $187.4 billion, an increase of 9% compared to 2023. So, while there are some negative numbers, there are some positive ones as well.

Along with the financial results, a letter from CEO Mary Barra came out, laying out plans for 2025. In her letter to GM Shareholders, she mentioned uncertainty around "trade, tax, and environmental regulations" but she also spoke about the strength of the GM lineup and the plans on continuing to move forward in 2025. Notably however, GM didn't release any financial models regarding the potential costs associated with new tariffs or changes in EV tax credits — an omission that some say caused GM stocks to drop as a result.

Barra mentioned several vehicles in her letter to shareholders, including both electric and internal combustion vehicles. Reading between the lines, it's clear to see automakers like GM are in a bit of a pickle right now. As manufacturers have shifted towards electric vehicles over recent years, if those investments are no longer desired by the government, or not financially viable, how should they proceed?

Knowing which regulations will stick and which ones will be jettisoned over the next four years is uncertain footing to say the least, putting much of the automotive industry in limbo. Barra's letter emphasized that point. "Whatever happens on these fronts," Barra said, "we have a broad and deep portfolio of ICE vehicles and EVs that are both growing market share, and we'll be agile and execute as efficiently as possible." While that does sound a bit like a football coach at halftime who's uncertain of the team's second-half future, there are some other indicators as to GM's future plans regarding EVs.

GM's 2025 financial guidance – as listed in the released report — "assumes a stable policy environment in North America." While the word "assumes" does a lot of heavy lifting there, it would appear that GM is leaning into its electric vehicle production despite some unstable footing. GM has projected big profit improvements in the EV space, with expectations of growing demand and reduction of costs in 2025. The overall projected net income is expected to be between $11.2 and $12.5 billion, a big change from 2024.

In her letter to the shareholders, Barra specifically mentioned three of Cadillac's new electric vehicles: the Escalade IQ, Optiq, and Vistiq. She also mentioned that EVs are now variable profit positive for GM, which means they're no longer costing more money to make than they are to sell. Those three EVs are part of a five-EV lineup currently on the books for Cadillac, which also includes the ultra-lux Celestiq and the more everyday-consumer-friendly Lyriq. There is some uncertainty, however, in how those models will be received in 2025, especially if federal tax credits for EVs are eliminated. 

With the ramping up of models like the Escalade IQ, Optiq, and Vistiq, the profitability of GM's EVs turning a corner, and gaining more market share, it would be a massive hit to lose the $7,500 federal tax credit that those vehicles currently qualify for. After all, GM is projecting an increase in EV sales from 189,000 units in 2024 to 300,000 units in 2025 — around 59% growth. 

The fact is that the gas-powered Escalade starts at $89,590, while the electric Escalade IQ starts at $129,990 before federal (and state) tax incentives are applied. That's a massive price difference that customers may not be willing to swallow if incentives go away. If sales of the Escalade IQ suffer as a result, GM may be forced to reevaluate its push towards EVs.

While the shareholder letter touched on EVs, it also mentioned some of GM's best-selling vehicles: the Chevy Equinox, Chevy Traverse, and GMC Acadia. These recently-updated models, along with other high-volume SUVs, are expected to sell well in 2025. If GM has to pivot away from an electric vehicle future, these vehicles will need significant upticks in production. Supercars like the new Corvette ZR1 get all the headlines, but where companies like GM make the biggest profits, are on mass-market models like SUVs.

In an interview with Fortune, Barra said that GM would "happily ramp up production" of internal combustion vehicles if EV demand shrinks. With all the money that's been invested in electric vehicle production over the last few years, and with the global demand for EVs, GM wouldn't pull the plug on EVs altogether, but a shift in policy could bring big changes to what you see on GM dealer lots in the near future.

Outside of the half-dozen models that CEO Mary Barra mentioned in her letter to shareholders, there are a number of changes going on that could help boost 2025 sales for GM. The aforementioned new Corvette ZR1 is coming to consumers soon and could push them into showrooms, after the first production C8 ZR1 crossed the auction block recently at $3.7 million – a good sign for sales in 2025.

An electric Chevy Camaro has been in the rumor mill for quite some time, with a four-door version of the classic nameplate expected in the future. Buick, while not mentioned by name in Barra's letter, has a number of new or updated models that should help drive sales at GM in 2025. Namely, the Envista and Encore get new powertrains, while the big three-row Enclave gets a full redesign. It's been a while since any of the pickup trucks in GMC's lineup were fully redesigned, so it's possible that we may see some significant announcements in 2025 regarding the Sierra 1500 or its heavy-duty siblings.

Something that you'll likely see more of on every GM vehicle in 2025 is subscription-based features. Super Cruise, GM's driver-aid system, is included on a trial basis at first, while customers have to renew and purchase the system if they want to continue using it. GM plan to double Super Cruise subscription revenue in 2025, approaching $2 billion in annual revenue from the feature within 5 years. GM's partnerships with other brands like Honda are also likely to continue in 2025, and that could change what features are offered in GM models going forward.

The Honda Prologue, for example, is built on GM's BEV3 platform which also underpins the Equinox EV and Blazer EV. Despite being built on a GM platform, the Prologue outsold both the Equinox EV and the Blazer EV in 2024. While brand loyalty or pricing may be factors, Honda also offers Apple CarPlay and Android Auto, while GM doesn't. When SlashGear wrote about the removal of these smartphone compatibility systems, GM reached out to clarify, explaining that their infotainment strategy "allows for greater integration with the larger GM ecosystem." If the gap in sales continues to grow, it's possible GM might rethink things.